Due Diligence Before Buying Commercial Property: A 20-Point Framework
Title, zoning, tenancy, building condition and financial verification — the checks that protect buyers before an option is exercised.
The window between receiving an Option to Purchase and exercising it is when commercial-property due diligence earns its keep. A structured framework prevents the two classic failures: missing a material defect, and losing a good deal to disorganised checking.
Legal due diligence covers title and encumbrances, road-line and MRT reserve plans, outstanding orders from authorities, and — for strata units — management-corporation by-laws, sinking-fund health and any disputes recorded in council minutes.
Physical inspection should be commissioned, not assumed: structural condition, mechanical and electrical systems, roof and waterproofing, and compliance of past alterations with approved plans. On tenanted assets, verifying actual rent collection against the stated rent roll is essential; side letters granting rebates are common and materially change yield.
Financially, buyers should recompute the yield from first principles — passing rent, real outgoings, realistic vacancy — rather than accepting marketing figures, and stress-test debt service at rates above current pricing before committing equity.
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